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Old 17th September 2016, 12:13   #91
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Default GST effect on car prices?

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Originally Posted by sgiitk View Post
One thing seems to be coming in for sure - the 4m/1500D/1200P category may be history. Does no seem to fit into any standard model. But then strange are the ways ...

Theoretically, yes. The price gap between an Amaze and City should diminish, as should the gap between Ecosport and Creta. Unless,

1. The companies refuse to pass on the GST benefits to customers. I think this is a possibility - but unless all companies act with collusion, at least a few companies are likely to pass on the benefit, leading to a cascading effect.

2. Companies deliberately want to keep the prices of higher segment product artificially higher, to keep the perceived value high. I could see Honda and Hyundai wanting to keep it that way for cash cow products such as City and Creta respectively. However, I think the market forces will be too prevailing for these guys to go against the tide.

In short, unless I need to buy a car and buy it right now, it's wise to wait..

Last edited by Abhi_Automobile : 17th September 2016 at 12:14.
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Old 24th September 2016, 12:04   #92
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Default Re: GST effect on car prices?

The GST threshold has been fixed at Rs 20 lakhs, which will be the annual turnover limit for GST exemption.

The actual GST rate and tax slabs will be decided at the GST Council's 3-day meeting which begins from October 17.

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At the end of the first meeting, the Council headed by Finance Minister Arun Jaitley decided that the state authorities will have jurisdiction over assessees with annual turnover of less than Rs 1.5 crore. Those with turnover of over Rs 1.5 crore, Jaitley said there would be cross examination either by officers from the Centre or state to avoid dual control.
However, the power for assessment of 11 lakh service tax assessees who are currently assessed by Centre, would remain with it. New assessees which would be added to the list would be divided between the Centre and states.
Talking to reporters after the meeting, Jaitley said while the annual exemption threshold for levy of GST would be Rs 20 lakh, it would be Rs 10 lakh in the north-eastern and hill states.
"All items including cess would be included in GST," Jaitley said, adding the Council is working on a compensation law and draft compensation formula.
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Old 24th September 2016, 13:16   #93
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Default Re: GST effect on car prices?

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Originally Posted by RavenAvi View Post
The GST threshold has been fixed at Rs 20 lakhs, which will be the annual turnover limit for GST exemption.

The actual GST rate and tax slabs will be decided at the GST Council's 3-day meeting which begins from October 17.



ET
What is the significance of this with respect to car purchases? Can anyone explain in layman's terms?
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Old 24th September 2016, 22:25   #94
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Default Re: GST effect on car prices?

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What is the significance of this with respect to car purchases? Can anyone explain in layman's terms?
What this threshold mean is that for businesses which have gross turnover ( sales, services , exports combined) below 20 Lakhs are exempt from indirect taxation. This means no VAT, Excise or Service tax for them in current terms. In GST the levy is CGST and SGST levy for center and states respectively.

Currently threshold for service tax is 10 lakhs (but in current case, turnover includes strictly turnover in taxable services) and for VAT, turnover in many states varies from 5 lakh to 10 lakh (here turnover is strictly sales turnover).

for a layman, wrt car purchases it makes no difference as all auto makers are much much above this threshold and hence are taxable but once you buy a car, a roadside mechanic might just become cheaper as he/she will be exempt from taxation if annual turnover is below 20 lakhs.

but as you would have figured out by now, since GST turnover is combined (Sales, services, exports) effectively it makes no real difference in most cases. So in my opinion, zero effect in car buyers as of now.

but GST effect on car purchases will be revealed soon. Next month in empowered group of ministers meeting will decide on the GST rates.

So those planning to buy car in near future, save the dates for 17th,18th and 19th Oct as it is when we will know if GST is good for us car buyers or not.
(I too am looking forward to buy a car soon, planning to go for either a grey Etios V or a Scross, final decision is left to home ministry )
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Old 26th September 2016, 12:08   #95
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Default Re: GST effect on car prices?

Congress CMs/FMs will push for an 18 percent GST rate, when the 3-day discussion of the GST Council to finalise the GST rates commences from October 17th.

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The party leadership has written to the chief ministers and finance ministers, asking them to firmly reiterate the capping of the GST rate at 18 per cent in the upcoming meeting. Congress rationale is that a higher rate will burden the common man and will defeat the very purpose of GST to create a common market and reduce the burden on both -- producer and consumer.
Congress in its note to chief ministers insisted that the constitutional amendment on GST was only passed after the government and the party negotiated and reached an agreement on principal demands of Congress.
The main demands were abolition of 1 per cent surcharge, compensation to states for revenue loss for 5 years, establishment of a dispute redressal mechanism and legal ring fencing of consolidated cap on GST rate.
"It was agreed that the rate will be reflected in the GST law that will be recommended by the GST council. It is important that the government honours the same," the party said.
This is the latest position in the GST implementation process:


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Old 26th September 2016, 12:24   #96
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Default Re: GST effect on car prices?

Does the 18% GST mean the hatchbacks would get costlier? As the current cumulative tax on hatchbacks/sub 4 meter sedans is 12.5%. Please correct me if I am wrong.
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Old 26th September 2016, 15:40   #97
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Default Re: GST effect on car prices?

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Does the 18% GST mean the hatchbacks would get costlier? As the current cumulative tax on hatchbacks/sub 4 meter sedans is 12.5%. Please correct me if I am wrong.

12.5% is the excise duty. On top of this CST & VAT is levied as well, so it crosses 25% minimum for all cars.

Here is what looks like the most likely scenario:
http://in.investing.com/analysis/gst...ctor-200155339
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Old 26th September 2016, 22:51   #98
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Default Re: GST effect on car prices?

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Originally Posted by jetsetgo08 View Post
Does the 18% GST mean the hatchbacks would get costlier? As the current cumulative tax on hatchbacks/sub 4 meter sedans is 12.5%. Please correct me if I am wrong.
This is incorrect. Currently Excise duty for hatchbacks is 8% and VAT is 12.5% in Delhi (VAT may vary state to state, UP is 14%)

This comes out to be 20.5% in Delhi (Not to mention that if a car is manufactured in Maharashtra, it will suffer 2% Central Sales Tax CST)

So Overall it is 22.5%.
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Old 27th September 2016, 11:12   #99
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Default Re: GST effect on car prices?

From the first calculations, it looks like the luxury vehicles prices would drop 9.18% in Delhi and 11.6% in Punjab.

Taxes in Delhi for Luxury vehicles: 30% Excise, 2% CST and 12.5% Vat may only add up to 44.5% tax but with the cascading effect of taxes(tax on tax), the actual effective tax rate comes to 49.18%, which is about 9.18% higher than the 40% sin tax or luxury tax proposed for luxury vehicles and big SUVs

Same calculation for Punjab: 30% Excise, 2% CST, 14.30% VAT adds up to 51.56% tax overall, after taking into account the cascading effect. So, Punjab will see a drop of 11.6% in Luxury Car prices.

And since this is a change in tax structure only, and not in the cost of the vehicle, the savings will eventually be passed on to the consumers. Now, once this news is out and confirmed, a lot of people would hold up buying new luxury vehicles atleast until GST kicks in.

How would the car companies respond to such a situation?
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Old 27th September 2016, 12:10   #100
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Default Re: GST effect on car prices?

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Originally Posted by Muski View Post
This is incorrect. Currently Excise duty for hatchbacks is 8% and VAT is 12.5% in Delhi (VAT may vary state to state, UP is 14%)

This comes out to be 20.5% in Delhi (Not to mention that if a car is manufactured in Maharashtra, it will suffer 2% Central Sales Tax CST)

So Overall it is 22.5%.
The Excise Duty on small cars is 12.5% currently and Delhi tax works out at 12.5%+12.5%+2% (CST)=27%

Additionally there is an infrastructure Cess of 1% to 4% and it's treatment would be finalized by the GST Council
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Old 27th September 2016, 12:36   #101
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Default Re: GST effect on car prices?

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Originally Posted by JoyPangli View Post

And since this is a change in tax structure only, and not in the cost of the vehicle, the savings will eventually be passed on to the consumers. Now, once this news is out and confirmed, a lot of people would hold up buying new luxury vehicles atleast until GST kicks in.

How would the car companies respond to such a situation?
I have also been asking myself the same question. When the GST rates are finalized next month we would know the difference in tax and hence get a good picture of whether to wait or not. The manufacturers would be in a huge fix if the tax structure does indicate a reduction in pricing. Even 10% is a huge difference and most of the people would postpone their purchase decisions till April. Manufacturers on the other hand cannot shut down or reduce output for their assembly lines for a few months. As I see it the manufacturers have 2 options in such a scenario.

1. Do not give out any indications of passing over the benefits to the customer. Additionally spread misinformation about things being not "clear". Maybe even paint a picture through dealerships/SA that things might tale a turn for the worse so people should buy now.

2. Give heavy discounts to try to lure customer. In tandem with the misinformation campaign this might just work to give them some sales during the 4-5 months of GST uncertainty.
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Old 6th October 2016, 19:12   #102
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This is how SIAM (Society of Indian Automobile Manufacturers) has suggested GST rates should be:

- Only TWO rates for conventional vehicles - Standard GST rate should be applicable on small cars, MUVs, Two wheelers, Three wheelers and Commercial vehicles, and Cars other than small cars should attract a GST rate which is 8 percent more than the standard rate.

- For electric vehicles, hybrid electric vehicles and other alternative fuel vehicles, the body said that a lower GST rate which should be at least 8 percent less than the standard rate need to be applied.

- The road tax and registration tax to remain outside the GST framework. (this will further burden the consumer and Road Taxes needs to be subsumed in GST)

Quote:
While for a long time there were only two rates of Excise Duties on passenger cars, in recent years, the bigger car rates have fragmented and today the industry has four rates for passenger cars excluding Electric Vehicles and hybrid electric for which lower rates are applicable. In view of the current scenario, there is a need to look at GST rate for automobiles sensitively, SIAM added.
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Old 6th October 2016, 21:56   #103
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Hi
All interstate supplies are subjected to IGST.

All local supplies are subjected to CGST + SGST.

The cascading effect of multiplicity of taxes are reduced. That's the clincher for GST.

Let's wait till the GST council meeting scheduled for the third week of this month to ascertain the rates of taxes applicable on various commodities.
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Old 19th October 2016, 08:13   #104
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Default Re: GST effect on car prices?

http://m.timesofindia.com/business/i...w/54927359.cms

GST council seems to be settling at 26% as highest slab for automobiles (luxury cars will be taxed at higher rate specific for sin goods, however definition of Luxury cars may be changed from current 10 lakh cutoff)

The above means cars like base to mid trims of Ciaz, City, Rapid, Vento, Verna, Duster, Scross etc will become much more affordable now. All trims of Etios will become cheaper.

Current tax rate of above cars is around 30% excise + 12.5% Vat + 2% CST + cess which overall comes above 46%. This as per the above link will change to 26%. For a 9lakh car ex showroom like Scross delta, this means price drop off about ~20% which is whopping 1.2~1.3 lakhs (9*1.26/1.46=7.7)

Let's see if manufactures pass this advantage to customers.
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Old 19th October 2016, 08:56   #105
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Default Re: GST effect on car prices?

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GST council seems to be settling at 26% as highest slab for automobiles
No, although smaller cars should be covered under 26 % slab, they plan to have an ultra luxury tax slab as well. Now what will be the threshold of declaring such cars a luxury needs to be seen.
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